Officials: Higher sales taxes could lower property taxes

TALLAHASSEE -- Now that property insurance rate relief is likely, lawmakers have turned their attention to another bane of homeowners: rising property taxes.

House Republicans are expected today to unveil their plan for trying to give Florida residents a break from soaring local tax rates.

But local governments are wary, concerned that anything that cuts money coming in will make it harder to pay for services residents expect, from fixing potholes to putting police on the beat.

While some in the Legislature say local governments simply need to curb spending, others know that's a political difficulty -- and that has some thinking about how lost incoming property tax money might be replaced.

"It's a realistic solution," said Rep. Dave Murzin, R-Pensacola, said of the idea that the sales tax could be raised a few pennies to try to ensure local governments continue providing services without big cuts.

Critics say sales tax increases would disproportionately affect the poor, who tend to pay much more in sales tax than in property tax; wealthier people are likely to pay more in property tax.

"A sales tax increase is going to fall very heavily on low-income people because low-income people tend to spend all of their income," said Iris J. Lav, who studies state tax structure as deputy director of the Center on Budget and Policy Priorities. She spoke to lawmakers during a legislative property tax summit Tuesday.

Murzin and other proponents of the idea acknowledge it may be unpopular with some residents -- particularly people who live paycheck to paycheck.

"People might get mad if the cost of a six-pack of beer goes up," Murzin said. "But everybody's got to pay into the system."

He argued that lower income people use city services just as much as wealthier ones, if not more -- and they don't pay as much for those services because they pay less in property taxes.

'Be open minded'

Gov. Charlie Crist has been vocal about the need to reduce local property tax rates but, as has been his style, he has deferred to lawmakers on how it should be done. On Tuesday, he sidestepped questions about whether property tax cuts should be offset by higher sales taxes.

"We all need ... to be willing to be open minded about new ideas that may come forward," Crist said. "I think our citizens appreciate that. They need relief and they need it soon."

Among the more radical proposals some lawmakers have floated is getting rid of the state's property tax on Floridians' primary residences entirely.

That may be unrealistic, because replacing the lost revenue would require a sales tax increase approaching 8 cents, making the total tax 14 or 15 cents on the dollar, Dominic Calabro, president of Florida TaxWatch, told lawmakers at the summit.

Calabro also noted that a hefty increase in sales tax would boost prices for tourists, which could hurt the state's largest industry.

One thing local governments are concerned about is a cap on spending or incoming taxes.

More than half the cost of running a city or county is typically for public safety -- mainly police and fire, said John Thomas, legislative director for the Florida League of Cities.

If lawmakers decide to limit local tax collections, "it would be disastrous for cities and the ability to do the services," Thomas said. Also on the cutting block would be the next biggest expenditure for many cities -- parks and recreation programs.

That would likely anger local residents, perhaps even more than having fewer police on the street.

"How many soccer moms will be affected?" asked Thomas.

Crist, however, has suggested that some cities simply are spending too much.

"It's time to roll (the taxes) back," Crist said. "If it offends some at the local government level, I apologize."